RPSM11105540 - Technical Pages: Lifetime allowance: Where the lifetime allowance used up: Liability when the member is dead: Assessing the recipient

Assessing the recipient of the relevant lump sum death benefit for the lifetime allowance charge due

Where the member’s personal representatives identify a chargeable amount following the payment of a relevant lump sum death benefit they must report this to HMRC. HMRC then assesses the recipient of the lump sum payment for the lifetime allowance charge due.

Where there is more than one recipient, the level of charge on each recipient will be calculated by HMRC on a proportionate basis (on a ‘just and reasonable’ basis) - see RPSM11105520.

The lifetime allowance charge due will always be at the rate of 55% (as it will be triggered by a lump sum payment, so the chargeable amount will always be a lump sum amount).

Time limit HMRC has for making an assessment

HMRC has 6 years from being notified of the relevant lump sum death benefit payment giving rise to the chargeable amount to make the assessment (so 6 years from the point of notification by the personal representatives, as discussed in Step 4 in RPSM11103690). However, an assessment cannot be made later than 20 years after 31 January following the tax year the payment was made.

Deadline the recipient has for accounting for the charge due

Once assessed, the recipient has 30 days from the issue of the notice of assessment to pay the due charge.

If the tax has not been accounted for by 31 January following the end of the tax year the relevant lump sum death benefit was paid in interest will accrue on the charge due.